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The Federal Reserve's approval of a foreclosure settlement with 13 banks this year happened without a formal vote of the board of governors, according to a letter Fed regulation czar Daniel Tarullo sent to Sen. Elizabeth Warren, D-Mass. The letter, sent in response to a request from Warren and Rep. Elijah Cummings, D-Md., for more information regarding the settlement, said that Fed staff made the decision with "delegated approval authority."

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Sen. Elizabeth Warren, D-Mass., and Rep. Elijah Cummings, D-Md., are calling on the Federal Reserve Board to take a more active role in enforcement actions. The lawmakers think that some enforcement actions, such as a recent settlement with mortgage servicers, have been too lenient.

The Federal Reserve Bank of New York is poised to conduct a small test of primary dealers' readiness. "Like the earlier repo and reverse repo operational readiness exercises, this work is a matter of prudent advance planning by the Federal Reserve. The operations have been designed to have no material impact on the availability of reserves or on market rates," the New York Fed announced.

The Federal Reserve Board of Governors did not vote on agency staff's decision to end its foreclosure review process with a settlement, officials wrote in a letter to Sen. Elizabeth Warren, D-Mass., who has questioned regulators' role in the deal. Board members were in touch with staff, however, says Fed governor Daniel Tarullo. Warren said she is "troubled by the disengagement of the board" because "the consumer impact is enormous, and by all accounts the whole process has been plagued with problem after problem and needed better management and oversight."

The Federal Reserve's robust balance sheet means that when it eventually raises interest rates, it may have to pay billions to banks while halting payments to the Treasury Department, Robin Harding and Tom Braithwaite write.

The Federal Reserve Bank of New York published a paper discussing central bank lending during times of market illiquidity, advising that loans be made at more generous terms and "collateral of suspect quality" be accepted. Otherwise, central banks should accept only top-quality collateral and make loans at above-market rates, according to the New York Fed.